Slowdown-hit India Inc turns to villages

Papia Lahiri, ET BureauDec 26, 2008, 02.01am IST

NEW DELHI: With over 70% of India's population residing in rural areas, capturing these markets is becoming one of the most lucrative options for all sectors. In the wake of economic crisis, while the urban markets remain subdued due to cash crunch, rural economy has remained largely unaffected.

A good harvest has further added to their respite. As a result, marketers are focused on small towns and villages with dedicated workforce. Companies such as ICICI, Unilever, LG, Hero Honda, ITC, Future Group are deploying fresh talent and existing employee base to tap the potential in the rural markets and are creating a base in it.

"The rural India has cash in hand and are not bound by EMIs or loans," says Pradeep Kashyap, CEO, MART, a rural marketing firm. "With the majority of our population based in tier-III, tier-IV cities and villages, it is the right time to penetrate into rural markets, and many companies are doing just that." They are hiring graduates and B-school freshers to study these markets and then devise a strategy for them, he adds.

Initially preferred by FMCG and consumer durables sector, now even telecom, IT, financial services, insurance and retail sectors have entered the arena. It is not always that the fresh recruits are from top B-schools or colleges as they might not like to be placed in such areas. However, those recruited definitely like to work at grassroots and connect with the majority of population.

Even in the 80s, rural markets were considered a big priority by the consumer durables sector, but it was ignored due to unavailability of proper rural demographic data. Post-liberalisation, tapping the urban markets in tier-I and tier-II cities was considered to be the prerogative.

Now, with the easily accessible data on rural demographics and urban saturation, the tides have turned in the favour of rural economy. ITC, for instance, is engaging MBAs from IRMA, MANAGE, IIFT, SIBM and others similar B-schools, who have a sound educational background and are able to understand the rural markets for managerial positions.

"Be it procurement, setting up front-line demonstration plots, engaging farmers for the distribution of FMCG or jobs at Choupal Saagar stores, many of them are stationed in villages or small towns," says ITC CEO (agri businesses) S Sivakumar. Unilever has a Project Shakti, which markets FMCG products to rural consumers and is planning to start working on a new project by hiring freshers, to connect well to them.

Micro insurance as a concept is also appealing the insurance and financial services sector. Awareness has seeped into the bottom of social pyramid, leading to concerns on human and livestock health. The idea of insurance is fast catching up. "We are planning to start hiring graduates to track the rural market and create a potential," says ICICI Foundation vice-president (strategy) Prerana Langa. "The project is still on role and we have tied up with an NGO for the same."

Many companies are tying up with NGOs to help set up base in rural areas. Mitra, for instance, is one such NGO, which is helping corporates to map the potential of rural markets. Says Mitra co-founder Rahul Nainwal: "The rural India is going to be the next big middle class and corporates wish to address this market. Although, this market had caught their attention, sometime back. But now is the right time to deploy people there and give back to the society."

The rural areas and smaller towns present vast opportunities for most companies, who are trying to come to terms with a relatively slower growth rate this fiscal. "With the pressure on corporate bottom lines to increase their operational efficiencies, it would be an interesting tactic for companies who are targeting the rural and semi-urban sectors to deploy more of their entry-level and mid-management recruits into the field," says Korn/Ferry International client partner (global technology market) Joy Nandi. It would give them an understanding of these markets, increase their penetration and indirectly reduce their cost of operations from not having to dedicate office space and resources in the corporate centres.